Addenda's Anton Tabuns breaks down why the firm went neutral on abatement as OMERS, BCI, and critics land on different sides
Canada is building its first national sustainable finance taxonomy but as one expert suggests, the most contentious piece of the framework - the controversial abatement category - hasn't even been fully drafted yet as the advisory group is still working through all the categories.
Anton Tabuns, VP of sustainability, risk and research at Addenda Capital, believes it’s premature to assess how abatement might reshape investment decisions or product labelling until the specific project criteria and structural details are in place.
The proposed abatement category, which would recognize investments that reduce emissions in high-polluting sectors without necessarily decarbonizing them, has notably split opinion among institutional investors, pension funds, and advocacy groups.
As Responsible Investor previously reported, Addenda Capital has taken a neutral position on the category, a choice that reveals the complexity of the issue for asset managers navigating the energy transition.
"When it comes to the global transition to lower carbon technologies, there is a fair bit of incomplete and inconsistent information in financial markets," explained Tabuns, who also sits on the Financial Sector Advisory Group advising on the taxonomy's development. "There's some confusion over what might qualify as transition investment," he added, particularly as governments, private sector players, and the public have all developed their own definitions of what counts as green or transition finance, creating confusion over which projects are grounded in climate science.
The taxonomy, grounded in the Paris Agreement's goal of limiting warming to well below 2 degrees Celsius, aims to cut through that noise by giving the market a single, credible framework.
"Rather than having everyone invent their own taxonomy and evaluation criteria, this would provide a clear set of guidelines and would help the entire system work more effectively and hopefully more efficiently and with more transparency," explained Tabuns, noting the current taxonomy is not Canada's first attempt at building a sustainable finance framework.
“Staying competitive as a country during the energy transition requires that Canada make sustained large-scale capital investments across energy, industry, transportation, buildings, and natural resources,” he added.
According to Tabuns, there was a previous initiative called SFAC (Sustainable Finance Action Council), which involved some of the same participants and was launched under the Trudeau government but failed to gain traction. In his personal view, the current effort represents a second crack at the problem.
Additionally, the abatement category would make Canada's taxonomy unique, Tabuns suggests. Roughly 70 countries have built or are building their own frameworks, and none include a comparable category. Tabuns acknowledged the logic behind it, highlighting Canada's heavy oil and gas footprint means the taxonomy's architects cannot ignore high-emitting sectors, but he emphasized interoperability with global frameworks matters too.
"We believe that having a separate category would, at least theoretically, allow investors and stakeholders to recognize credible near-term reductions in high emission-intensive activities that can't decarbonize over the long term," he said.
"We also think it would require significant research and analysis to ensure that the guardrails are clear, disclosures are substantive and ensure that this category doesn't undermine the credibility of the taxonomy as a whole," Tabuns added.
Canadian pensions weigh in on abatement category
As for some of the big Canadian pension funds, like OMERS, the fund agrees in principle that the abatement taxonomy should include an abatement category, but also with conditions. According to their submission, the fund stated that the category "warrants further consideration, provided it is supported by clear safeguards to ensure the taxonomy remains scientifically credible."
British Columbia Investment Management (BCI) also agrees in principle but emphasized that "these activities should not be included in the transition category" and that "an abatement category provides an opportunity for substantial reductions in Scope 1 emissions,” according to their submission.
They added that "the guardrails associated with this category will be crucial for determining its overall credibility."
BCI also suggests additional guardrails that weren't in the proposed framework: limited assurance of emissions, board oversight of climate risks and opportunities, and disclosure aligned with the Canadian Sustainability Standards Board (CSSB).
One unnamed organization or individual submission, however, disagrees on the abatement fundamentals wholeheartedly. The submitter - whose identity and institutional affiliation are not disclosed - calls the category 'a loophole' that would allow activities unable to achieve life-cycle emissions reductions to be labelled sustainable anyway.
Moreover, they argue it’s designed primarily to benefit the oil and gas sector, whose dominant emissions come from Scope 3 use, and that the premise of declining demand is naive given the industry's active efforts to sustain consumption.
Transition criteria should start before abatement
Given the limited resources of the current custodian team and Secretariat, Addenda's position is that the green and transition criteria for the first six sectors should be completed before abatement work begins. That sequencing would let early lessons shape the more contentious category, particularly as Canada tries to attract capital into industrial sectors with a viable path to net zero by 2050.
Tabuns also emphasized the capital flow concern.
"I think one of the worries that folks might have when it comes to including it is by including an abatement category, capital that would have gone towards green and transition activities might instead flow towards the oil and gas sector when they are not having as much of an issue accessing capital as perhaps some of these green and transition opportunities might," he said.
According to Tabuns, some opponents point to the Oil and Gas Methane Partnership 2.0, a voluntary framework that international competitors of Canadian companies are already using to address methane challenges, as evidence the category is unnecessary.
Patience required as taxonomy criteria takes shape
To that end, however, Tabuns underscored the timeline is aggressive but appropriate, noting a general comment period has already closed, and the teams leading the process aim to release sector-specific criteria for additional public comment in 2026, with finalization of the first sectors targeted for 2027.
On the feedback process itself, Tabuns said a structured internal system is in place to aggregate and weigh input, and while it’s not tailored to any single organization's clients, he considers it fair and capable of capturing broad institutional and public sentiment.
“All of the categories under the taxonomy would provide certainty and transparency and would allow for more accurate labeling and agreement across [financial institutions] about which type of loans, lending, finance of any kind, qualifies as either green transition or abatement, if that ends up being part of the final taxonomy,” he said.
